My child has over £8000

Sas40

Left to her and it needs to be put away until she is 18 (she is now 11) would someone plz give me some sort of good advice on where to think about investing this ? would it be a junior Isa ? or some kind of trust fund ? Im really clueless but want to try and put it somewhere she will get a good return and not hit by tax etc ... Any info or advice would be so grateful ... Im just new on this tonight and hope you dont mind me asking for advice .
Many thanks

thenudeone

If the income is over £100 pa then it will all be taxable as the parent's income.

However if the gift is from anyone other than parents (eg grandapernts, uncles etc) it won't be.

Some clever thinking about cash withdrawals (non-traceable) and bank transfers or cheques from non-parents (traceable) should sort that problem

xylophone

SAS40 has said that the money was left to the child so the money belongs to the child and interest on it will not be taxed as the parent's.

I am assuming that the daughter's income is (and after the receipt of income on the inheritance will remain) below the taxable threshold for a single person.

As far as I can see, the will makes a simple gift of money to the daughter. Since the will did not specify that she could receive the gift immediately, she does not become entitled to the money until she is 18. The OP will therefore become the Trustee of a Bare Trust and can hold accounts in the name of OP re Miss OP. According to the HMRC:

"Trust accounts
The most common type of trust account held for children is a bare trust. Bare trusts can be called by another name, for example re accounts or nominee accounts. An example of a bare trust account is ‘Mrs Smith re Miss Smith’.

A bare trust account held for a child can be registered for interest to be paid without tax taken off by completing form R85. The form R85 must be signed by the child’s parents or legal guardian.
So long as the child does not become a taxpayer, the form R85 can stay in place until the 5 April following the child’s sixteenth birthday.

After the child has turned sixteen the account must be transferred into their own name before it can be registered for interest to be paid without tax taken off. If the account remains as a bare trust account the interest must be paid after tax has been taken off".

As SAS40 will remain Trustee after the daughter's sixteenth birthday, (since she is not to receive the money until she is 18), the R85 will be cancelled and SAS must reclaim any tax overpaid on an R40 in accordance with the relevant paragraph in the HMRC guidance, quoted below. The SAS40 is both Trustee and (I assume) the daughter's legal guardian.

"They do this by completing a repayment form R40 (PDF 97K) – the R40 comes with notes, R40 notes (PDF 186K). But if someone is claiming on behalf of a minor as a trustee (for example, a grandparent who holds a bare trust account such as Mrs Smith re Miss Smith) they must enclose a statement of the minor's income and capital gains during the year of the claim. The minor's legal guardian must sign this statement.

If the child does not have a tax office the form R40 should be sent to

Leicester & Northants Area (Claims) Office
Saxon House
Causeway Lane
Leicester
LE1 4AA

The telephone number for Leicester & Northants Area (Claims) Office is 0845 366 7850."

This was the procedure we had to follow when we were in a somewhat similar situation in regard to our son except that as I recall, the Tax Office was a different one then.

That said, I am no expert and if SAS40 is unsure what to do she should consult her tax office.

With regard to investments, SAS40 might consider National Savings (there is a special form for Trustees), Building Society Bonds, gilt edged stock, unit trusts, investment trusts or shares /bonds- Hargreaves Lansdown (by way of example) offer the facility of a Trust Account. Bear in mind that if you should invest in a stock market based account and the income is INTEREST rather than dividends, then any tax taken off should be reclaimed if the child's income is below the threshold for a single person.

A JISA (whether cash or stock/share based) might also be considered for part of the money?

Sas40

For your replies really appreciate them ! Xylo thank you so much for all that info although omg I will need to read it all 100 times to take it in lol ... Just to clarify .. My daughters dad passed away (we were no longer together or had never been married) he never left a will so his sons (older than my daughter of 11 they are in their 30's) had to apply for admin of probate to sort his estate .. so they all got the equal amount and my daughters share has to be put away until she is 18 . Would they have to go as trustees then as I carnt see them asking me ..(just awkward with me they are ).... Just dont know what to do .. How do I know they will put in her full amount and how would I know they were doing the right thing with it .... Do u receive documents when u invest ? could I get to see the doc's would my daughter be entitled to a copy etc ? her being only 11 ... They are just not telling me anything and all I want to do is ensure my little girl gets her fair share and its invested well for her >? any feedback once again would be soooo appreciated ... Thanks a million

atush

For a period of 7 years or more I would consider not putting it all in cash (as current interest rates are less than inflation). I would consider drip feeding it into an investment trust monthly or use a Junior ISA.

I have used Investment trusts to save for my 3 children for over a decade and when you invest monthly it can help with market volatility as when prices are falling you buy more shares/units for your money. They have turned out to be substantial funds, despite my measly 25 per month investment per child (now 35/mo)

Starbrite

Can I just say one thing please

Could you not set up something so she doesn't get the monies until aged 25? My friend he was left a fair amount of money when he was young and received the money aged 18 and well how do I say it, He spent it on nothing! He regrets the chocies he made but at the time he didn't look to the future, wife kids house etc etc I know he has some savings for his own children and has said they are not having the money until they are 25..

Just a thought, I know everyone is not the same....

DiggerUK

Gold sovereigns may not be the first thing you think of, but they are tax free to buy, and tax exempt when you sell.
Look in to it, bags of information out there, and many viewpoints to consider.
Best of fortune.
..._

HappyMJ

DiggerUK wrote: »

Gold sovereigns may not be the first thing you think of, but they are tax free to buy, and tax exempt when you sell.
Look in to it, bags of information out there, and many viewpoints to consider.
Best of fortune.
..._

Might be tax free but there are commisions to be paid on purchase and then again on sale. There is also a matter of secure storage and insurance during the time they are held.

atush

the investment trust savings plans I have for my 3 are in my name, withe the children as a designee. At ages17-20 now I am still in control of the plans and I am about to make the first ever withdrawal for my son age 20 for his last year at Uni. So this could help with them not going on a spending spree at 18.

They each have a cash savings acct and I will get that turned into an acct with a card at age 18 so they can spend or save etc. TBH, they would like to have acess now but I am afriad they would spend it, so I just conveniently 'lose' the forms I brought home from the bank lol.

liam8282

Starbrite wrote: »

Can I just say one thing please

Could you not set up something so she doesn't get the monies until aged 25? My friend he was left a fair amount of money when he was young and received the money aged 18 and well how do I say it, He spent it on nothing! He regrets the chocies he made but at the time he didn't look to the future, wife kids house etc etc I know he has some savings for his own children and has said they are not having the money until they are 25..

Just a thought, I know everyone is not the same....

There are probably people you could say the same of at 25, why not set it up so they can't get the money until they are 50?

At 18 they are an adult, it is rightfully their cash, so all anyone could do is hope that they have been advised in the correct manner as to what they should and shouldn't do.

xylophone

As far as I know, since the money came to the child by way of a will and there is nothing in the will saying otherwise, the money is the child's absolutely and she becomes entitled to it at 18.

It would seem to me that the executors of the estate should pass a cheque drawn in favour of the child for OP to invest on the child's behalf but I am no expert and in case of difficulty a solicitor's advice could be sought.

Otherwise the executors could choose to become bare trustees for the child and invest the money on her behalf as above but it would seem to me that as relations between the executors and the OP are not cordial, it would be better for the OP to become her child's Trustee?

With regard to investments, SAS will have a record of any she makes (Building Society passbook, investment certificate etc) and must ensure that all such records are safely kept.